On 22 March 2020, the Federal Government announced the following temporary changes to existing insolvency laws in order to provide relief for businesses in financial distress during the COVID-19 crisis:
1. Statutory demands against companies can only be used in relation to company debts exceeding $20,000 (up from $2,000)
2. Companies will have 6 months to comply with the statutory demand, (up from 21 days)
3. The personal liability of directors for company debts incurred while the company is insolvent has effectively been suspended.
Bankruptcy notices can only be issued to individuals with eligible debts over $20,000 (up from $5,000), who will also have 6 months to comply.
The Changes to Insolvency Laws Due to COVID 19
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